‘Unicorn’ is a bad word: Iyin Aboyeji’s Accelerate Africa pushes revenue-driven growth
At the demo day of the first cohort of Accelerate Africa, the accelerator aiming to be the continent’s version of Y Combinator, several people in the audience laughed when Iyin Aboyeji, a cofounder of the accelerator and two-time co-founder of startups valued over $1 billion, quipped, “Unicorn is a bad word.” His assertion is an honest reflection of how pursuing higher valuations can cause startups to burn out after incinerating millions of dollars. For a heady two years, founders were trying to match the optimism of cash-rich VCs buoyed by a zero-interest rate policy (ZIRP) and may have lacked deep market understanding. There has since been a return to earth. The Accelerate Africa team and the ten founders in the first cohort. Biola Alabi, general partner at Acasia Ventures who shared the panel with Aboyeji, noted that startups across African markets are now cutting their valuations to size. Investors are coming to deal tables with more scrutiny—evaluating the business’s unit economics and revenue generation before making investment decisions. This paradigm shift from building the next billion-dollar valued startup to creating multi-billion dollar revenue-generating businesses is the foundation of Aboyeji’s Accelerate Africa—to put participating startups on the path to $1 million in revenue. This shift was felt in the presentations by the 10 founders who presented on demo day. They tried to define their ambition by why their technology was important, how they planned to acquire customers, and how much they were asking customers to pay. Iyin Aboyeji, Yvonne Ike; the head of Sub-Saharan Africa at Bank of America, Abubakar Suleiman; the CEO of Sterling Bank, Yomi Awobokun; the managing partner at CE-IV, and Biola Alabi; general partner at Acasia Ventures. Remi Dada whose startup, Campus HQ, claims to be the AirBnB for workspaces, refrained from cliches about the millions of Africans in the addressable market and instead focused on how much revenue the business made during the 4-week programme. Amanda Etuk, the CEO of Messenger, said her startup which was gunning to be the Moove of delivery riders, secured a partnership from Bolt to offer vehicle financing to its Nigerian delivery riders. The Eswatini founder of JuiceMe, Sandile Dlamini, shared news of securing a liquidity partner that will scale the operations of its Whatsapp-based app that gives employees access to the wages they have earned before payday. After having its AI bot say two proverbs in Swahili, Yinka Iyinolakan, the founder of CDail, an AI startup also shared that his company’s revenue model includes licensing its AI model which speaks and understands over 1,000 African languages to much bigger companies. The other seven startups in the accelerator are; FlickWheel; a Nigerian auto-tech startup that offers on-demand vehicle repair, Afriskaut; a Nigerian AI and data startup that enables the discovery of sports talents across Africa, Agrails; a cleantech startup that provides AI-powered data systems that provide real-time Africa’s climate risk and opportunities, Checkups; a Kenyan health tech startup that offers affordable and accessible healthcare to the uninsured and underserved via micropayments, PipeOps; a Nigerian startup that allows companies without cloud expertise to automatically set up, deploy and manage their apps on the cloud, Settle; an Egyptian fintech that automates the process of B2B payments. Commending this more self-aware stance of founders, Abubakar Suleiman, the CEO of Sterling Bank, who shared the panel with Aboyeji and Alabi promised to increase access to liquidity for startups who currently seemed to be excluded from institutional lending despite the rise in debt funding. “Banking is designed to give you cash flow today, to accelerate predictable cash flow tomorrow,” Suleiman said, trying to explain why many startups that have little to no revenue have limited access to bank loans. ”Your valuation is not a source of payment for a bank,” he said matter-of-factly as he turned his gaze from Iyin Aboyeji, who moderated the panel, to the tens of founders, investors, and operators in attendance. “I would also like to partner with Accelerate Africa or anyone to organise learning sessions for founders,” Suleiman added during the panel discussion he had with three local investors. “This is to help them understand the difference between trying to attract VCs and taking a loan from a bank.” In addition, he offered to provide liquidity for a private capital market, if anyone were to build one. Growth-stage investments and IPOs becoming less feasible avenues of financing and shareholder liquidity. Yvonne Ike, a fellow panel speaker and the head of Sub-Saharan Africa at Bank of America, shared that a private capital market like the London private market exchange would be a better option. Suleiman announced on the panel that he is open to supporting both the building and providing upfront liquidity for such a platform. Accelerate Africa seems to be off to a good start, as the participating founders say that it lived up to its promises: to radically improve their storytelling, financial models, and product thinking, and connect them to corporates and investors. The accelerator is not obligated to make equity investments in the startups, however, during the event, investors were urged to indicate their interest in any of the startups. Selected startups can expect investments ranging from $250,000 to $500,000. It is unclear which startups Future Africa will invest in, but a spokesperson for the company says it will have decided by the end of June.
Read MoreCash-strapped Copia suspends service in Central and Eastern Kenya
Copia Global, a Kenyan B2C e-commerce platform that allows retailers to shop and restock essential goods using a mobile app or USSD, has stopped taking orders from Central and Eastern Kenya one week after cashflow challenges forced it to go into administration. The new administrators have cut back on Copia’s markets to preserve cash as it seeks new investors, TechCabal has learned. The six affected markets are Naivasha, Machakos, Meru, Embu, Kericho, and Eldoret. The staff working in the depots that serve the affected markets have been sent on leave. On May 16, the company said it would lay off over 1,000 workers. The company has 900 permanent employees and 200 casuals on its payroll. Anne Mwihaki, Copia’s director of human resources, told employees via email that the company would inform “all external stakeholders, including agents, customers and transporters.” In a separate email, Makenzi Muthusi, one of the administrators appointed by Copia, assured employees that the firm had funds to cover May salaries but delayed the disbursement because they “were unable to complete the administrative tasks relating to the bank accounts.” Copia Kenya appointed Muthusi and Julius Ngonga of KPMG, an audit and advisory firm, to help turn around operations and raise fresh capital for the Kenyan unit. “As a follow-up to our previous communication on the administration process, as a reminder, the objectives of the administration are to maintain the company as a going concern, and the administrators continue to work with management to raise capital from new investors for the Kenya business,” Mwihaki said. Copia, once a darling of venture capitalists–including US’s DFC and GoodWell Investments–received $123 million in funding but failed to turn on profit. The company sought to turn informal rural kiosks into a multi-billion digital retail platform linking customers directly to fast-moving consumer goods (FMCG) manufacturers to lower product costs. At its peak, Copia had 1,800 staff and over 50,000 agents spread across Kenya’s Western, Nyanza, Central, and Eastern regions. In 2022, the firm opened a hub in Uganda but closed after a year, stopping its pan-African expansion ambitions.
Read MoreAs it enters its third year, e-commerce enabler Sabi creates a lane of its own
In business, comparisons and generalizations are common and useful, but sometimes they ignore complexities. So with those generalizations aside, here’s how to think about Sabi, a Norskenn-22-backed startup valued at $300 million in 2023: it’s in the business of creating market intelligence that enables commerce. While many B2B e-commerce companies focus mostly on retail distribution—a notoriously thin-margin business if ever there was one—Sabi serves manufacturers, distributors, retailers, and even farmers. It builds digital infrastructure for anyone involved in buying and selling. Sabi provides everything that makes commerce seamless: payments, retail, logistics, and most importantly, market intelligence that can be the difference between success and failure. Market information and clear data points can be difficult to obtain in Africa, driving inefficiencies for several players in the value chain. For instance, a distributor’s inventory management becomes easier if they can know with a high degree of accuracy, each retailer within a given market and the frequency of their orders. Such seemingly simple data points can be difficult in a market where one retailer or agent can act as an aggregator for several other retailers, obscuring granular information to make just-in-time inventory management possible. The complexity of Sabi’s model and its goal of collecting actionable intelligence on all players in the value chain means that it’s a platform and a marketplace. The company’s revenue is from a take rate on marketplace transactions and a margin on credit-related transactions. “Sabi has become, over the last three years, one of Africa’s largest and most important e-commerce companies,” said Ademola Adesina, one of the company’s co-founders. Rarely in the news, the company grabbed the public’s attention when it hit $1 billion in 2023 Gross Merchandise Value (GMV). This month, the business will celebrate its third anniversary. Founded in 2021 by Ademola Adesina and Anu Adasolum, Sabi has grown exponentially in three years. It has 250,000 registered users, facilitates 15,000 monthly orders, and in 2023 nearly tripled its revenues on an annualized basis from 2022. Most of that growth has come from Nigeria, its primary market. The company is also present in South Africa, and hopes to replicate this success in new markets like Tanzania and Senegal. “Our key differentiators are our product design and our focus on aligning incentives across the value chain. We are a partner to our users and we deliver for our merchants’ top and bottom lines,” Adasolum said. The company operates in the fast-moving consumer goods (FMCG), agriculture, and minerals sectors. “We’ve never really felt any need to follow models, we do follow the market,” she added. Despite the breadth of the company’s ambitions and offerings to players along the value chain, it is still asset-light. While being asset-light is often a buzzword, it makes sense once you understand that this is essentially a market intelligence play. It can keep warehousing partners in business by using intelligence to get them consistent order flow. “We’re not trying to displace distributors. We’re platforming them, giving them the tools, the financing, the logistics, etc, to grow their businesses,” Adasolum said, highlighting their commitment to enabling commerce. “Sabi has been helpful and supportive in terms of our ventures and our trade. Without them, we probably wouldn’t be in business,” said Sadiq Mohammed, the founder of K2 agricultural processing company which has received close to N800 million in financing from Sabi for two deals. Facilitating trade beyond Africa Sabi has also talked up its vision to facilitate trade beyond Africa. Through its digital platform, Technology Rails for African Commodity Exchange (TRACE), the company helps big manufacturers facilitate commodities exports from Africa to Asia, Europe, South America, and the USA. “We’re one of the largest facilitators of exports from Nigeria to the rest of the world,” Adesina said. At a time when the AfCFTA agreement is only in its first phase, tools like SABI’s TRACE are using technology to meet buyers and sellers at every point of need. The company believes that it will benefit greatly from the implementation of the free trade area project in terms of the discovery of buyers and sellers, facilitation of cross-border logistics, tracking, and financing. With inflation and currency pressures in different markets, companies have been forced to close shop or cut costs. But Sabi sees this differently. The devaluation of the naira, while challenging, has also presented an opportunity for Nigerian exports. A weak naira makes Nigerian goods cheaper for international buyers and savvy businesses can capitalise on this opportunity to scale. “What we’re good at is spotting that directional move on the macro level and supporting our businesses to monetise that opportunity.”
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New home affairs online booking SA 2024
The South African Department of Home Affairs has a new convenient home affairs online booking system known as the eHomeAffairs. It streamlines the process of submitting ID and passport applications online, making online payments for applications, even making bookings where allowed, and consequently obtaining essential documents like smart ID cards, passports, and even marriage certificates. Here’s a step-by-step guide to navigate your home affairs online booking in 2024: 1. Confirm centre eligibility for the home affairs online booking 2024 The online booking system is currently not available at all Home Affairs offices. Before you proceed, visit the Department of Home Affairs website and check if your preferred office offers online bookings. There you’ll find a list of participating offices. 2. Get requirements While booking your appointment online, ensure you have the necessary documents readily available. These typically include proof of identity (your ID book or passport) and any additional documentation specific to your application (birth certificate for ID applications). 3. Go to eHome page With your chosen office confirmed and documents prepared, it’s time to visit the official Home Affairs online booking portal: https://ehome.dha.gov.za/eHomeAffairsV3/SGAccount/LogOn. This is the designated platform for all home affairs online booking. 4. Register or login If you’re a first-time user, you’ll need to register to use the home affairs e-portal. This involves creating a profile with your basic information. Existing users can simply log in using their saved credentials. 5. Book your slot Once logged in, find the “Booking” section and select the type of service you require (e.g., Smart ID application, passport renewal), provide the required information/documents, and make appropriate payments. The system will then display available appointment slots for your chosen Home Affairs office. Pick a date and time that best suits your schedule and confirm your booking. 6. Confirmation and reminders after home affairs online booking 2024 Following your home affairs online booking, you’ll receive a confirmation email with all the appointment details. Double-check the information for accuracy and make sure to note the appointment date and time. The system might also send you reminders closer to your appointment date. Final thoughts on the home affairs online booking 2024 By following these steps, you can enjoy a hassle-free experience with your next Home Affairs visit. The home affairs online booking may require you to pay some fees at some points, and these fees may vary depending on the service you’re applying for. So it’s important to bear cost implications in mind.
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👨🏿🚀TechCabal Daily – A broken Heritage
In partnership with Share this newsletter: Lire en Français اقرأ هذا باللغة العربية Happy new month Before you dig into today’s edition, we think it’s pretty important for you to know that The Mastercard Foundation is hosting its inaugural EdTech Conference from July 8 – 10, 2024 at the Transcorp Hilton in Abuja, Nigeria. The Mastercard Foundation EdTech Conference, in partnership with the Federal Government of Nigeria, is themed “Education Technology for Resilient and Inclusive Learning in Africa.” You can expect conversations on the current state of the EdTech ecosystem, emerging trends, the role of EdTech in solving Africa’s educational challenges and much more. Click here to find out more. P.S Today’s edition is written by our Editor-in-Chief, Olumuyiwa Olowogboyega, and he’s going to be writing to you a lot more as part of a team-bonding team-building exercise we’ve got going at TechCabal. In today’s edition Nigerian fintechs can now onboard new customers Heritage Bank loses its licence Kimberly-Clark ramps up its Nigerian exit Seacom has completed all subsea cable repairs The World Wide Web3 Opportunities Fintechs CBN lifts ban on fintech customer onboarding Between 2020 and 2023, formal financial inclusion—a metric that measures a population’s use of financial services from banks or non-banks—has grown from 56% to 64%. An easier way to think about it is that 3 in 5 Nigerians are financially included. A 2024 report from EFInA points out that technology has played a significant role in driving inclusion. Neobanks like Carbon, Kuda, and ALAT allowed people to open bank accounts on their phones, an important evolution as smartphone and internet penetration grew. Agency banking, which has taken the form of physical agents with hard infrastructure embedded in markets and mom-and-pop shops, has allowed people in semi-urban, rural, and even underserved areas to open bank accounts and access cash-in, cash-out services. As important as the technology has been, regulation and a near obsession by the Central Bank leadership to improve financial inclusion have been equally pivotal. For years, some regulations allowed anyone to open bank accounts without sharing a lot of personal information. It was a gift that removed friction in the onboarding process, and Nigerian fintech startups don’t look gift horses in the mouth. They onboarded customers faster than we could blink and extended their distribution in Nigeria’s huge informal market. During Nigeria’s 2023 cash crunch, they rose to the occasion and showed that in countries with large informal markets, distribution is king. But as transaction volumes and value grew exponentially, bad actors took notice, and fraud—across fintechs and banks— grew. The fintech startups, which have not always been as tightly regulated as the banks, received outsized scrutiny. Threats were made, talks were had, a freeze on new customer onboarding was issued, conditions were shared to lift that freeze and after five long weeks, there’s light at the end of the tunnel. Here’s what Muktar Oladunmade wrote for TechCabal: The Central Bank of Nigeria has lifted a six-week-long ban on onboarding new customers imposed on five of the country’s most prominent fintech startups: Paga, OPay, Kuda, Palmpay, and Moniepoint. On May 20, 2024, the fintechs were given several conditions for the onboarding freeze to be lifted including asking them to block P2P crypto transfers and mandating physical address verification for all tiers of accounts. While the decision to lift the freeze on customer onboarding is a quick read, I recommend reading our exclusive coverage from April 29 that showed how the CBN arrived at the decision. Moniepoint is Africa’s fastest-growing fintech The Financial Times has ranked Moniepoint as Africa’s fastest-growing fintech based on its absolute and compound growth rate. Read more about it here. Banking NDIC takes over Heritage Bank “The market can stay irrational longer than you can stay solvent,” a saying attributed to John Keynes is a reminder that you can rightly spot a trend or make a prediction but the market will chug right on for months without blinking. While it’s not a perfect analogy, it’s how I think about Heritage Bank and the Central Bank’s decision to revoke its licence on Monday. Heritage Bank and its staggering (losses/high NPLs/weak capital base—take your pick) is the worst-kept secret in Nigerian banking. Many analysts began predicting the bank’s collapse in 2018, but its survival remained irrational in the face of their expertise. But like all good but inherently problematic runs (hello MMM), it had to end. Here’s what I wrote on Monday morning from the car park of a Heritage Bank branch in Victoria Island where I stalked watched NDIC officials who refused to speak to me walk into the bank to begin the takeover process: Heritage Bank’s high indebtedness has been public for five years and there has been significant coverage of the erosion of its capital base. In December 2023, a Nigerian publication claimed Heritage Bank failed a stress test, prompting the Central Bank to ask the financial institution to seek strategic investors to aid its recapitalisation. How bad was Heritage Bank’s situation? Part of the answer is in this article which gives you a sense of how inevitable this turn of events was: According to internal documents seen by TechCabal, at least 90% of the bank’s active loan portfolio of around ₦700 billion was considered lost or doubtful as of March 31, 2024. Two words: hot damn. Collect payments anytime anywhere with Fincra Are you dealing with the complexities of collecting payments from your customers? Fincra’s payment gateway makes it easy to accept payments via cards, bank transfers, virtual accounts and mobile money. What’s more? You get to save money on fees when you use Fincra. Get started now. Shutdowns Kimberly-Clark, makers of Huggies diapers begins Nigeria exit Fifteen years and a $100 million manufacturing facility later, Kimberly-Clark, the American maker of Huggies diapers and Kotex announced its intention to exit the Nigerian market on Saturday in a terse statement: Kimberly-Clark today announces it has made the difficult decision to exit its business in Nigeria after almost 15 years, due
Read MoreKimberly-Clark lays off 90% of employees as it begins Nigerian exit
Three days after it first announced its decision to exit Nigeria, Kimberly-Clark, the American multinational that manufactures Huggies diapers, has begun the process of shutting down its operations in Africa’s most populous country after laying off nearly 90% of its employees, one person with direct knowledge of the matter said. At a company-wide meeting last Friday, some 150 workers were told about the layoffs. The company has a relatively small number for a factory thanks to a high level of automation, one person familiar with their operations said. It also outsources sales and distribution to Multipro. Maersk, the Dannish shipping and logistics company, handled its imports and exports. The retained employees will eventually be laid off when the exit is completed. A communications manager for Kimberly-Clark did not immediately respond to a request for comments. While it did not initially share a timeline when it announced its exit plan, the company’s actions mean it will write off its $100 million investment in a manufacturing facility that was launched in Lagos in 2022. It will also cease manufacturing or marketing its Huggies and Kotex products in the country. In a statement last Friday, the company said it is exiting Nigeria due to a “recently refocused company strategic priorities globally as well as economic developments in the country.” Kimberly-Clark’s departure from Nigeria after almost 15 years is a telltale sign of the struggles of manufacturing in Nigeria with companies having to deal with depressed consumer spending power, high cost of electricity, and FX scarcity. Multinationals like Unilever, GSK, and PZ Cussons have either scaled back or exited market segments entirely.
Read MoreBreaking: CBN gives fintechs go-ahead to begin onboarding new customers after weeks of pause
The Central Bank of Nigeria has lifted a six-week-long ban on onboarding new customers imposed on five of the country’s most prominent fintech startups: Paga, OPay, Kuda, Palmpay, and Moniepoint. The regulator’s directive to freeze new customer signups first came on April 29, 2024, days after over 1,000 accounts were blocked for peer-to-peer crypto trading. The country’s National Security Adviser (NSA) also categorised crypto as a security concern and was keen to have the fintechs ramp up Know Your Customer (KYC) and fraud measures to prevent crypto transactions going through the fintechs. On May 20, 2024, the fintechs were given several conditions for the onboarding freeze to be lifted including asking them to block P2P crypto transfers and mandating physical address verification for all tiers of accounts. The fintechs were also asked to update their facial verification for customers. The fintechs have been disproportionately criticised for lax KYC measures that have led to fraud, but recent reports suggest that the battle against fraud is an industry-wide issue. Nonetheless, the fintech startups will be happy with today’s decision which crippled growth for weeks and stopped them from onboarding thousands of customers. *This is a developing story
Read MoreDepositors will get up to $3,300 in relief following Heritage Bank’s liquidation
As the liquidation process begins for Heritage Bank following the revocation of its licence on Monday, customers will get up to ₦5 million ($3,313) as insured deposits, per NDIC guidelines. All customers with less than ₦5 million may get their deposits back as early as Wednesday, said one person familiar with the matter. “Depositors with funds in excess of the insured deposits will be paid as and when the assets of the closed bank are realised,” an excerpt from the NDIC’s notice read. The timing of Heritage Bank’s liquidation presents a silver lining for customers, as the national insurer only increased the insured deposit limit from ₦500,000 in May 2024. The increase was meant to inspire confidence in Nigeria’s banking sector and cover 99% of depositors in Nigeria. However, customers must submit documents such as proof of account ownership, verifiable means of identification, and alternate bank accounts to facilitate seamless verification and payment of their insured deposits. While customers might heave a sigh of relief, they will have questions about how the regulator allowed the troubled bank to operate for this long without intervention. In 2023, TechCabal reported that the bank’s customers could not withdraw their deposits for weeks. An employee of the bank also told TechCabal on Monday that the bank’s mobile app has been unavailable for two months, highlighting the bank’s struggles. The NDIC will repay customers from the yearly premiums paid by the banks. For deposits beyond the ₦5 million threshold, the government-backed insurer will assess the bank’s assets and sell whatever it can. It will also recover their loans and sell whatever investments the bank has. In May 2023, the NDIC began compensating customers of microfinance banks (MFBs) and primary mortgage banks (PMBs) whose licences were revoked by the CBN. Two of the most prominent banks affected by the CBN action are Eyowo Microfinance Bank, backed by Softcom, and Purple Microfinance Bank. At the time, some customers of the affected banks received a maximum payment of ₦200,000 upon proof that they held deposits.
Read MoreExclusive: How ₦590 billion in non-performing loans made Heritage Bank’s closure inevitable
Despite initial denials of a liquidation process from deposit insurer NDIC, Nigeria’s Central Bank announced the revocation of Heritage Bank’s banking licence or ceasing to “carry on in Nigeria the type of banking business for which the licence was issued for any continuous period of six months.” Heritage Bank has struggled with huge Non-performing loans for years and on social media, many commenters were surprised it took so long for Heritage’s licence to be revoked. Heritage is thought to have one of the worst NPL ratios in the banking industry. According to internal documents seen by TechCabal, at least 90% of the bank’s active loan portfolio of around ₦700 billion was considered lost or doubtful as of March 31, 2024. The bank’s tier-1 capital comprising equity, reserves, and accumulated earnings was in the deficit of over ₦1 Trillion. CBN revokes Heritage Bank’s licence minutes after NDIC visit Internal documents showed that less then 5% of outstanding loans were performing, with 90% classified as lost. Some of those loans date back to 2018 when the bank reported loan impairment of ₦37.5 billion in the first half of 2018. According to people familiar with internal conversations, the bank was considering a host of strategies like storming the residences of defaulters with available security resources, employing debt recovery agents, sale of pledged property, and engagement with ex-staff. The Nigeria Deposit Insurance Corporation (NDIC) has been appointed the liquidator of Heritage Bank. Essentially, NDIC officials will take over the existing management of the bank and will begin the payment of insured deposits up to the insurable limits which was recently increased from ₦500,000 to ₦5 million. One NDIC official who asked not to be named said depositors will access their deposits as quickly as Wednesday. Regulators will begin to find a buyer for the bank and in the interim, a bridge bank will be created to take over the bank’s failed assets and liabilities, allowing customers to continue accessing their deposits and banking services uninterrupted.The last time a Nigerian bank—Skye Bank—was liquidated, Polaris Bank took over Skye Bank with a ₦786 billion cash injection.
Read MoreCBN revokes Heritage Bank’s licence minutes after NDIC visit
The Central Bank of Nigeria has revoked the banking licence of Heritage Bank, minutes after a TechCabal report that officials of the Nigeria Deposit Insurance Corporation visited the bank. “In accordance with its mandate to promote a sound financial system in Nigeria and in exercise of its powers under Section 12 of the Banks and Other Financial Institutions Act, hereby revokes the Licence of Heritage Bank Plc,” a statement from the Central Bank read. Exclusive: NDIC takes over Heritage Bank as CBN revokes licence of struggling lender “The action has become necessary due to the bank’s breach of Section 21(1) of BOFIA 2020. The Board and management of the bank have not been able to improve the bank’s financial performance, a situation which constiutues a threat to financial stability.” Heritage Bank’s struggles have long been public and a visit from NDIC officials on Monday morning were the final signs that a takeover was on the way. *This is a developing story.
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